Budget 2017: How Will Putrajaya Spend Its RM260 billion

Prime Minister Datuk Seri Najib Razak unveiled the 2017 budget today on the backdrop of low oil prices, a yawning deficit and weak economy that have left Malaysians struggling with the rising cost of living and runaway house prices.

With an expenditure of RM260.8 billion, what is on everyone’s lips is how will the government spend that money in 2017?

Below is a list of six ministries that received the highest allocation in Malaysia Budget 2017. For each of these ministries, we look at their operational expenditure and highlight the subsections which would receive the most money:

Just like the previous budget, the government allocated about one-fifth of its budget on education and even if these two ministries were separated, the Ministry of Higher Education will still rank sixth in the list.

The MOE’s biggest allocation is in operations from early education to post-secondary education. The two largest subsections it is pumping money into is food aid for hostel students and per capita grants, at RM1.1 billion respectively.

MOHE is channelling most of its money to 20 public universities with RM7.4 billion and to scholarships with RM4.3 billion. Among the list of scholarships, the Public Service Department (PSD) receives the highest quantum of RM1.6 billion.

The projected spending of the MOE in the 2017 budget is RM42.9 billion – an increase from RM41.36 billion last year and RM40.85 billion in the previous year. MOHE however sees a different fate. The ministry was allocated RM13.38 billion during the 2016 budget but this year it only gets RM9.5 billion, a cut of RM3.88 billion (29%).

Overall, spending on education has been rising for three years with an expenditure of RM52.7 billion (2013), RM55.6 billion (2014), RM56.63 billion (2015) but it dipped last year at RM54.74 billion (2016) and this year as well, at RM52.4 billion.

This year’s education allotment is certainly family-friendly. For example, the Schooling Assistance Programme provides RM100 each to students from families earning up RM3,000. However, this will likely not make much of a dent in the household expenses for these families.

To ease the burden of working parents, a tax relief of up to RM1,000 will be given to individual taxpayers who enrol their children aged 6 years and below, into registered nurseries and preschools.

With rising cost of living the biggest financial concern for Malaysians, these financial assistance will be much needed.

Perhaps an improvement in the quality of education can be expected as more funds are pumped into these two ministries in 2017.

Ministry of Finance (MOF): RM30.3 billion

This year’s budget sees the MOF receiving slightly more than last year. Much of this is expected to be directed to transfer payment and aid. Last year, with an expenditure of RM32.25 billion, it allocated 66% or RM21.44 billion into such assistance, with RM10.63 billion going into subsidies and cash assistance.

Just last week Second Finance Minister Datuk Johari Abdul Ghani revealed that Selangor recorded the highest number of BR1M recipients from 2014 till this year with a total of 1,017,403 recipients. Overall, 7.1 million applicants were approved for the handout scheme.

During his budget speech, Najib said BR1M will benefit 7 million recipients with an allocation of RM6.8 billion.

As always, the centre of discussions for the next few weeks will be the BR1M. Next year, we will see an increased amount, just like previous budget rounds.

So for households in the e-Kasih database with a monthly income below than RM3,000, BR1M will be increased to RM1,200 from RM1,050 and RM1,000.

For households earning between RM3,000 and RM4,000, BR1M will be increased from RM800 to RM900.

For single individuals earning below RM2,000, BR1M will be increased from RM400 to RM450.

Also for those who do not own a vehicle, down payment will be made using BR1M and a rebate of RM4,000 will be provided for the purchase of Proton Iriz.

Despite the perks and some of financial empowerment, it still believed the BR1M might not alleviate the rising cost of living.

Ministry of Health: RM23.47 billion

The MOH has always been on the favourable side of the budget until 2015. During that year it was initially given RM21.7 billion only to see a RM300 million reduction during the revised 2015 budget. The same fate happened in the following budget where it initially received RM23 billion but took a 10% cut, or nearly RM250 million, when expenditure was recalibrated.

Deputy Health Minister Datuk Seri Dr Hilmi Yahaya urged the government to allocate the same amount it received during the original budget 2016, and he got his wish. This year, the MOH has been given RM23.47 billion in expenditure.

The two top items on the ministry’s spending list are RM4.5billion for operations of 1Malaysia clinics and mobile clinics as well as health and rural clinics; RM4billion for the supply of drugs, consumables, vaccines and reagents to all government hospitals and health facilities.

Just hours before the tabling of the budget, a news report revealed that the public complained about being asked to take their medical tests at private labs.

The health minister denied this saying that government hospitals were not facing a shortage of funds to provide medical assistance.

This time with a bigger budget, and hopefully with no recalibration, the poor and lower middle-income will get to reap the benefits of 1Malaysia clinics and subsidised medicine at government hospitals as the bulk of the ministry’s allocation is dedicated to the above.

Home Ministry: RM12.8 billion

Despite receiving less than it did last year, the Home Ministry makes this Top 6 list with an allocation of RM12.8 billion than RM13.09 billion in 2016. Like last year, the most of this year’s allocation is for the Royal Malaysia Police (PDRM) with RM8.7 billion.

Among major programmes and projects include building 12 district police headquarters, VAT69 commando training centres as well as procurement of vehicles and equipment. Last year RM3.19 billion out of RM7.98 billion was allocated on administration while another RM2.2 billion was set aside for keeping domestic security and public order, from law enforcement to counter-terrorism.

How much from this year’s RM8.7 billion will be put in the above is yet to be known but next year’s budget will see RM40 million distributed to registered Residents’ Associations. These grants of up to RM10,000 will be provided for the purchase of security control equipment, cleaning and maintenance of the neighbourhood.

Deputy Prime Minister Datuk Seri Zahid Hamidi revealed that the crime in the country declined 0.8% in the first nine months of this year.

He said while organised crime and armed robbery had gone down, snatch theft was still rampant.

A dedicated budget for the PDRM should help mitigate such incidents. But the police were always the largest recipients of the home ministry’s allocation in previous budgets.

What to look out for is a set amount for registered Residents’ Associations which could help beef up security in housing estates.

Ministry of Defence (MINDEF): RM11.7 billion

About RM1.8 billion will be directed to defence asset maintenance such as aircraft, patrol vessels, communication equipment, buildings and weaponry, while RM1.3 billion is allocated for communication devices, rations and uniforms.

Only RM323 million will be set aside of ESSZONE operations, particularly for personnel patrolling the eastern border of Sabah.

The eastern border of Sabah was always been a security problem. Just last month seven fishermen were feared kidnapped, and many have called for a strengthening of security in the area.

However whether the RM323 million will be effective in staunching pirate attacks is yet to be seen.